Vietcombank to sell 10% stake to foreign investors

Vietcombank to sell 10% stake to foreign investors

350 million shares of Vietcombank will be issued by way of public auction or private placement.

Commercial Bank for Foreign Trade of Vietnam (Vietcombank) is planning to sell more than 350 million shares, or a 10 per cent stake, to foreign investors in the first half of 2018.

The bank’s decision comes after a green signal from the Government, Nikkei reports.

Vietcombank chairman Nghiêm Xuân Thành told reporters that the plan for the private equity placement had been approved by the relevant authorities. The shares will be issued by way of public auction or private placement to a limited number of foreign investors.

He said Singapore sovereign fund GIC was among the potential buyers. Japan’s Mizuho Bank, the biggest foreign investor in Vietcombank with a 15 per cent stake, will be allowed to buy additional shares to maintain its ownership ratio at the bank.

In Việt Nam, foreign ownership in state banks is capped at 30 per cent. Vietcombank is among a small number of banks that have a 9.12 per cent stake reserved for foreign investors, according to Linh Nguyen from Saigon Securities Research.

To raise capital by issuing shares, Vietcombank originally expected to complete the transfer of a 7.7 per cent stake to GIC in 2016. However, the deal was not approved due to disagreements on the share price. The Government wanted to sell the issuance based on market prices but not lower than the valuation price.

Vietcombank shares closed at VNĐ71,400 (US$3.14) on Friday, having doubled in value since the end of 2016.

Phạm Thị Tố Tâm, an analyst at KIS Vietnam, a subsidiary of Korea Investment & Securities Co., said Vietcombank’s asset quality remained healthy, having reduced its 2017 non-performing loans ratio to 1.13 per cent, the lowest in the sector, and with loan-loss coverage at 130 per cent, the highest among its peers.

Vietcombank has sold its shares to other local financial institutions to reduce its risk of cross-ownership. The bank also plans to divest its investment in Vietnam Airlines this year, from which it expects to make good profit.

Meanwhile, the lender is making a big push to promote retail and individual lending, which accounted for 32.7 per cent of the total lending in 2017, up from 25.3 per cent in 2016.